TheCitizen - It's all about you
  • Home
  • Headlines
  • Latest News
  • Governance
  • Business
  • Financial Crimes
  • Opinion
  • Editorials
No Result
View All Result
  • Home
  • Headlines
  • Latest News
  • Governance
  • Business
  • Financial Crimes
  • Opinion
  • Editorials
No Result
View All Result
TheCitizen - It's all about you
No Result
View All Result

Economy is collapsing, rescue it now – Punch

The Citizen by The Citizen
August 10 2022
in Public Affairs
A A
0
Buhari demands loyalty, patriotism – Minister tells naval ratings
22
SHARES
734
VIEWS
Share on FacebookShare on Twitter

Enfeebled for long by mismanagement, underperformance and sleaze, Nigeria’s economy is exhibiting clear signs of impending distress. The sense of doom was accentuated at the weekend when the Nigerian Economic Summit Group and Nigerian Employers’ Consultative Association warned that the economy was tottering. Like multilateral organisations and other experts, the duo premised this on rising debt and repayment obligations, inflation, extensive insecurity, and the foreign exchange crisis, among others. Salvaging the situation is a daunting task considering the antecedents of the regime of the President, Major General Muhammadu Buhari (retd.).

But something must be done fast to save Africa’s largest economy. While regime officials persist in denial, the reality is that the positives are few, while the negative figures are soaring. Nigeria has been unable to meet its OPEC production quota of 1.83 million barrels per day. Throughout 2021, it recorded a shortfall of 300,000 bpd, traced mainly to oil theft. Officially, the figure is now 400,000 bpd in losses. For a country in dire financial straits, this creates serious liquidity problems.

A major oil producer without a functional domestic refinery, the Federal Government has budgeted N4.19 trillion for petrol subsidies in 2022. In the five months to May, it paid N1.27 trillion. For 2023, the regime has proposed N6.72 trillion for subsidies. Since February, petrol shortages have blighted the economy. Partial and possibly temporary relief has come only because the government looked the other way when marketers increased the pump price.

Manufacturers, airlines, and households are groaning as prices of diesel, kerosene, and aviation fuel hit the roof. Some companies are drastically scaling down operations. The Manufacturers CEO’s Confidence Index Survey of 400 CEOs in first quarter 2022 organised by the Manufacturers Association of Nigeria revealed a decline in confidence by 1.5 points to 53.9 points in Q1, down from 55.4 points in Q4 2021.

MAN blames the deceleration on “rising cost of production, illiquidity in the forex market, insecurity causing disruptions to supply chains and rising uncertainties from the tensions in Eastern Europe and how the war in Ukraine has affected us.”

With industries down, the jobless rate of 33.3 per cent portends grave economic implications, particularly among the youth. More job losses are expected. State governments project that they might soon stop paying salaries because of the deductions for petrol subsidies. It is a chaotic, opaque accounting system.

Inexplicably, the governors have refused to mount pressure on Buhari to auction the four state-owned loss-making refineries. Privatisation is the best global practice. In the single largest transaction in history in 2019, Saudi Arabia partially privatised Saudi Aramco, raising $30 billion. Aiming to raise $55 billion by 2030, the Saudis will privatise other state assets. In contrast, the Buhari regime holds on unwisely to commercial assets that could fetch it money and stop waste.

More dangerous is Buhari’s excessive craving for debt. From N39.1 trillion in Q4 2021, total debt stock rose to N41.6 trillion in Q1 2022, the Debt Management Office said. Between January and April, debt servicing gulped N1.94 trillion compared to retained income of N1.63 trillion. Unconvincingly, the regime blames its borrowings on the need to build infrastructure, but it fails to cut down the huge recurrent expenditure. Currently, over 90 per cent of revenue is spent on debt servicing, a recipe for disaster.

Consequently, the country’s public finance system is unsustainable. From 25.34 per cent in 2017, debt-to-GDP climbed to 27.69 per cent in 2018, 29.17 per cent in 2019, and 34.49 per cent in 2020.

Illogically, the Minister of Finance, Zainab Ahmed, persists in arguing that “Nigeria’s problem is not debt but one of revenue.” The regime stubbornly rejects adopting policies that can raise its revenue, including the effective collection of stamp duty, arresting the leakages in the Treasury Single Account, liberalisation and privatisation of commercial public assets, and drastic reduction in the cost of governance.

In the long term, the prospects are grim. The government projects debt servicing to hit N10.25 trillion by 2025, an increase of 186 per cent from the N3.69 trillion in 2022. Tax collection, including VAT, is very low: politicians and businesses routinely evade tax. Vice-President Yemi Osinbajo said tax-to-GDP is 8.0 per cent. Our peers do between 15 and 25 per cent.

The government ignores calls to repeal the Railways Act 1955 that inhibits private investment in rail transport. Instead, it is borrowing to build rail tracks, and pursuing a doomed state-sponsored national air carrier project.

To save the economy, Buhari should wean himself of statism. The oil refineries, the Transmission Company of Nigeria, airports and seaports, should all be privatised. The government should significantly reduce its stakes in the power distribution and generation companies to enable private capital to begin the arduous task of giving Nigeria reliable electricity.

Undoubtedly, the crash of the naira (down to N710 to $1 in early August) has fuelled unparalleled inflation now at 18.60 per cent. It has never been this bad. The economy has suffered two recessions under Buhari.

Averting disaster requires taking some hard decisions. The six executive orders facilitating the ease of doing business, especially at the seaports and airports, should be implemented. The government should cut costs and stop the borrowing binge. The Ajaokuta Steel Company, uncompleted since 1978, should be denationalised transparently to provide the industrial backbone for the economy.

The government’s increasing resort to ‘Ways and Means’ has unpleasant long-term implications. It should instead plug fiscal leakages, partner with the private sector on petroleum products refining and imports and accord priority to building world-class infrastructure.

Government should effectively collect its taxes. Tax offenders should be prosecuted as in other jurisdictions where government runs on taxes, not commodity sales.

Retooling the security system is essential; the regime should secure international assistance to defeat Islamic terrorism and banditry. It should stamp out oil theft, which costs the economy $1.9 billion monthly, according to the Nigerian National Petroleum Company Limited.

State governments are a major problem. Most governors depend on federal handouts, live like emperors and offer nothing in terms of formulating and executing self-reliant economic programmes. They should devise policies to leverage on their peculiar endowments and aim for fiscal self-reliance and running self-sustaining economic units.

Share9Tweet6
Previous Post

Panel recommends sack of whistleblower on fake employment in federal ministry

Next Post

Republican fume as FBI raids Trump’s home

Related Posts

Overhaul Nigeria’s prisons – Punch
Public Affairs

Overhaul Nigeria’s prisons – Punch

July 3 2025
ICPC secures conviction against aviation worker over fake employment
Public Affairs

Second term bid interfering with governance – Punch

July 1 2025
The 2027 deadline for CBT examinations – The Sun
Public Affairs

The 2027 deadline for CBT examinations – The Sun

June 22 2025
Maryam Abacha’s forged revisionism – Punch
Public Affairs

Maryam Abacha’s forged revisionism – Punch

June 22 2025
Benue carnage: Beyond army chief’s relocation – Punch
Public Affairs

Benue carnage: Beyond army chief’s relocation – Punch

June 17 2025
Nigeria’s manufacturing: A call for revamp – Punch
Public Affairs

Nigeria’s manufacturing: A call for revamp – Punch

June 11 2025
Next Post
Republican fume as FBI raids Trump’s home

Republican fume as FBI raids Trump’s home

Serena Williams set to retire from tennis

Serena Williams set to retire from tennis

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

FROM THE GRASSROOTS

Olubadan dies at 90

Olubadan dies at 90

by The Editor
July 8 2025
0

...

Lagos Assembly summons AG over delayed implementation of LG law

Lagos Assembly summons AG over delayed implementation of LG law

by The Editor
July 1 2025
0

...

Boston Museum returns looted artefacts to Oba of Benin

Boston Museum returns looted artefacts to Oba of Benin

by The Editor
June 29 2025
0

...

CAN advises Miyetti Allah to tame violent members

Imo villagers decry armed herdsmen presence in farmlands

by The Editor
June 13 2025
0

...

APPOINTMENTS

Gunmen abduct passengers in Ondo

Ondo Assembly confirms 15 commissioner-nominees

by The Editor
July 1 2025
0

...

Dalori takes over as APC acting chairman

Dalori takes over as APC acting chairman

by The Editor
June 28 2025
0

...

Sierra Leone President succeeds Tinubu as new ECOWAS Chairman

Sierra Leone President succeeds Tinubu as new ECOWAS Chairman

by The Editor
June 22 2025
0

...

Police Inspectors appeal to IGP over unpaid salary arrears

Police Inspectors lament delayed promotion, appeal to IGP, PSC

by The Editor
June 17 2025
0

...

ODDITIES

Three masqueraders land in prison for flogging Enugu residents

Three masqueraders land in prison for flogging Enugu residents

by The Editor
June 29 2025
0

Police Inspector loses life by accidental discharge from son

Police Inspector loses life by accidental discharge from son

by The Editor
June 17 2025
0

Truck runs into Christmas procession in Gombe

Gombe perm sec, four others die from electrocution

by The Editor
June 14 2025
0

GLOBAL NEWS

Flash floods claim 27 lives in Texas

Flash floods claim 27 lives in Texas

by The Editor
July 8 2025
0

...

US deports eight men to South Sudan after legal battle

US deports eight men to South Sudan after legal battle

by The Editor
July 6 2025
0

...

Ex-Equatorial Guinea anti-corruption chief with over 400 sextapes faces 18-year jail term

Ex-Equatorial Guinea anti-corruption chief with over 400 sextapes faces 18-year jail term

by The Editor
July 3 2025
0

...

Iran vows retaliation if Trump enacts threats

Iran orders suspension of cooperation with UN nuclear agency

by The Editor
July 2 2025
0

...

Three die in African Union helicopter crash

Three die in African Union helicopter crash

by The Editor
July 2 2025
0

...

State of the States

Bandits snatch Xmas foodstuffs, drinks from man on bike

Kaduna debunks curfew rumour in Kakuri community

by The Editor
July 1 2025
0

...

Kogi schools to reopen Sept 14

FG grants Kogi govt 15 mining licences to tap mineral resources

by The Editor
June 28 2025
0

...

Lagos govt denies involvement in demolition of Obi’s brother’s property

Lagos govt denies involvement in demolition of Obi’s brother’s property

by The Editor
June 26 2025
0

...

Islamic New Year: Jigawa declares Friday public holiday

Islamic New Year: Jigawa declares Friday public holiday

by The Editor
June 26 2025
0

...

Plugin Install : Widget Tab Post needs JNews - View Counter to be installed
  • Trending
  • Comments
  • Latest
Trump hits Japan, South Korea, others with new tariffs

Trump hits Japan, South Korea, others with new tariffs

July 8 2025
Flash floods claim 27 lives in Texas

Flash floods claim 27 lives in Texas

July 8 2025
ADC begins takeover of PDP structures in Northern states

ADC raises alarm over Tinubu’s plot to destabilise coalition

July 8 2025
Nigeria, Netherlands reopen double taxation agreement

Nigeria, Netherlands reopen double taxation agreement

July 8 2025

EDITORIAL REVIEW

Overhaul Nigeria’s prisons – Punch

Overhaul Nigeria’s prisons – Punch

by The Editor
July 3 2025
0

ICPC secures conviction against aviation worker over fake employment

Second term bid interfering with governance – Punch

by The Editor
July 1 2025
0

The 2027 deadline for CBT examinations – The Sun

The 2027 deadline for CBT examinations – The Sun

by The Editor
June 22 2025
0

Maryam Abacha’s forged revisionism – Punch

Maryam Abacha’s forged revisionism – Punch

by The Editor
June 22 2025
0

Benue carnage: Beyond army chief’s relocation – Punch

Benue carnage: Beyond army chief’s relocation – Punch

by The Editor
June 17 2025
0

Opinion

Tinubu cancels national broadcast, to address Nigerians from N’Assembly

Tinubu, The Audacity To Hope: Two years after

by The Editor
June 12 2025
0

...

Supreme Court affirms Mbah as Enugu State Governor

2027: Mbah, PDP and newfound political romance in Enugu

by The Editor
May 17 2025
0

...

Nigeria should emulate India’s blueprint for development

Nigeria should emulate India’s blueprint for development

by The Editor
April 21 2025
0

...

Much ado about immortalising Humphrey Nwosu

Much ado about immortalising Humphrey Nwosu

by The Editor
March 31 2025
0

...

Plugin Install : Popular Post Widget need JNews - View Counter to be installed
  • Home
  • Headlines
  • Latest News
  • Governance
  • Business
  • Financial Crimes
  • Opinion
  • Editorials

© 2024 TheCitizen Ng. All Rights Reserved.

No Result
View All Result
  • Home
  • Headlines
  • Latest News
  • Governance
  • Business
  • Financial Crimes
  • Opinion
  • Editorials

© 2024 TheCitizen Ng. All Rights Reserved.